We have talked this week about rising oil and some ways to trade that move. Another opportunity this latest price jump in oil creates is across an entire sector. There has been a strong correlation between oil prices and clean energy stocks and this latest move is just setting up.
The tipping factor is when the oil price hikes hit the pump and start to resonate with consumers. With a fertile field for EVs and a wave of acceptance, it is a much shorter cycle for this relationship to be seen.
Right now, some of the big clean energy ETFs are getting pushed down and setting up a buy.
One would expect that clean energy would be seeing a steady climb upward but there have been a couple factors that have created some dips.
First, most clean energy companies are growth companies which means they need capital to build the infrastructure they need to compete in a dog-eat-dog market. Venture capital money is tight these days and is forcing these green entrepreneurs to get creative.
Also the competition is vicious. Even Tesla took a hit from VW over the topic of an affordable EV. This shows that it is a pool of sharks and big headlines have sharp teeth.
Another factor that is just starting to impact EVs is the expiration of tax credits for buyers. Tesla clipped through its allotted credits head of its competitors and reacted with price drops. Other big names are seeing the bottom of that barrel and will be forced to respond.
All said, this wave of shifting to EVs is not ending soon. By looking at ETFs like TAN and IDRV you can buy the whole pool and still ride the wave even if the fish in the pool are gobbling each other up.
Keep learning and trade wisely,
Market Wealth Daily